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tdp2664 InvestorPlace A late surge in the market Tuesday was not much help for the shares of AOL (NYSE: AOL ). The stock price closed the day at $11.19, down a grueling 26%. Keep in mind that it was trading at $27 back in November. Now, the market cap is only $1.2 billion. There was much hope when Tim Armstrong came on board as CEO. He promised a turnaround and wasted little time in taking action. That is, he cut costs and acquired various properties, such as Huffington Post and Techcrunch . Well, the results have been a big disappointment. In the latest quarter, AOL posted a loss of $11.8 million, or 11 cents per share. Revenues were off 8.4% to $542.2 million. Basically, there was a fall-off in display and search ads. On the conference call, management indicated that things began to deteriorate in June. And unfortunately, it looks like the slowdown will continue, especially in the current economic downturn. True, AOL probably is trying to deflect things. There's little doubt the company is not good at execution. Yet if the online market is truly healthy, even a laggard should do well, right? Definitely. In other words, it seems reasonable that advertisers are getting jittery and might hold off on spending. So for investors, it's probably a good idea to get cautious on the online advertising operators. This definitely is the case with some of the high-fliers like Pandora (NYSE: P ) and Zillow (NASDAQ: Z ). These companies are sporting hefty valuations and could be vulnerable. Finally, AOL's results also might be suffering from the impact of Facebook. With its huge user base — which can be highly targeted — it is in a great position to take market share. Tom Taulli is the author of various books, including "All About Commodities" and "All About Short Selling." You can find him at Twitter account @ttaulli. He does not own a position in any of the stocks named here.
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